Press

Slight Quarterly Growth in Worldwide Handheld Devices Market, But Year-Over-Year Decline of 2%, According to IDC

FRAMINGHAM, MA – JULY 27, 2004 — The worldwide market for handheld devices experienced a slight sequential gain in the second quarter of 2004, but, despite strong shipments from top 5 vendors palmOne and Medion, was unable to post a year-over-year increase. According to IDC’s Worldwide Handheld QView, device shipments increased 3.2% sequentially and dropped 2.2% year-over-year in 2Q04 to 2.2 million units.

The most significant development during the quarter was Sony’s announcement that, with the exception of Japan, it would be withdrawing from the handheld device market. The decision, prompted by Sony's difficulties gaining share in the mature handheld device market, resulted in top vendor palmOne emerging as the only major Palm OS-powered vendor in the market. While it remains unclear as to what degree Sony’s departure aided palmOne’s increase in shipments during the quarter, the burden is clearly on palmOne to pick up Sony's loyal user base during the second half of the year, or to lose them to the competition.

"Despite continuing developments in device technology and simultaneous declines in price points, handheld devices still face stiff competition from an increasing range of converged mobile devices capable of performing basic handheld tasks," said David Linsalata, analyst in IDC's Mobile Devices program. "The key to success for handheld device vendors lies in the complementary integration of advanced technology with improved solutions, such as the GPS bundles embraced by vendors such as HP and palmOne, that will enable the handheld device to evolve beyond its core PIM functionality.”

Vendor Highlights

• palmOne – Although palmOne's shipments increased only 0.6% year-over-year, the vendor was able to achieve sequential growth of 14.1% and a resulting market share gain of 4.0% during the second quarter of 2004. palmOne's challenge in the second half of 2004 will be to maintain its recent momentum while taking advantage of the imminent reality of becoming the only major Palm OS vendor in the handheld market.

• Hewlett Packard – Despite an 8.2% sequential drop in shipments in the second quarter and a corresponding drop in market share of 3.0% to 24.1%, HP was able to increase shipments 39.2% year-over-year. HP remains well-positioned for the future and expects to begin shipping a range of new handhelds in the third quarter of the year.

• Sony – Sony's position in the handheld market slipped 1.6% to a market share of 7.8% on a shipment decline of 14.6% sequentially and 33.2% year-over-year. Although certain regions continued to experience strong shipments of handheld devices, it will be difficult for Sony to maintain the number 3 spot as Dell pushes its new device and news of Sony's pending departure from the handheld market continues to impact the market.

• Dell – Year-over-year shipment growth of 4.6% was not enough to save Dell from a 7.8% sequential drop, resulting in a slight loss of 0.8% in market share. However, Dell's newest flagship handheld, the X30, is expected to continue to build momentum in the next quarter and help the company improve its market standing.

• Medion – After dropping shipments significantly in the first quarter of the year, relative-newcomer Medion recaptured the fifth spot from Toshiba with a market-leading, year-over-year growth rate of 67.3%.

• Vendor shipments are branded shipments and exclude OEM sales for all vendors.

• Handheld devices are pocket-sized, either pen or keypad-centric, and are capable of synchronizing with desktop or laptop computers. Handheld devices are designed to access and manage data including office documents, multimedia, and games.

• Handheld devices do not include telephony but may include wireless capabilities that enable Internet access and text communication. These devices feature evolved operating systems or application environments, such as Palm OS, Pocket PC, Windows CE, Handheld PC 2000, Linux or proprietary solutions and have the ability to download and run applications and store user data beyond their required PIM capabilities.

IDC is the premier global market intelligence and advisory firm in the information technology and telecommunications industries. We analyze and predict technology trends so that our clients can make strategic, fact-based decisions on IT purchases and business strategy. Over 700 IDC analysts in 50 countries provide local expertise and insights on technology markets. Business executives and IT managers have relied for 40 years on our advice to make decisions that contribute to the success of their organizations.

IDC is a subsidiary of IDG, the world’s leading technology media, research, and events company. Additional information can be found at www.idc.com.